Buying my first Property?

Question

This is my first post on BP (Just signed up), and I have not purchased a single property yet. I'm hoping to have my first one by end of the year (That's my goal anyway) but I don't know much about REI and I'm concerned about how to get good financing, what the best first step to take is, etc. I want to make a move but what are some things to be aware of and how would you guys recommend I start? I assume Single family? Thanks in advance

Nathan Gesner · Answer

Congratulations on your first BiggerPockets post!I recommend you build a strong foundational understanding of real estate investing. 1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss. 2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey. 3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes. 4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you. 6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education. You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Joe Villeneuve · Answer

Step number one is to NOT set a timeline as a goal...only set minimum dollars in profit as a goal. Establishing a timeline will only make you accept a bad deal as the timeline nears.

Jon Hobgood · Answer

That's a good tip, thank you!

Drew Sygit · Answer

@Jon HobgoodIf I had to start all over again, I'd look to acquire a 2-4 unit property with an FHA low-down payment mortgage. Getting it under market value would be a bonus. So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower. Hopefully, I would increase the value of the property in 1-2 years and be able to refi out of the FHA mortgage. I'd also learn a lot about maintenance and managing tenants. Then, with my hands-on experience, I could decide if I wanted to repeat the process or target 5+ units - which my experience would help with lenders. Good luck with whatever you decide to do!

Jim Pellerin · Answer

Theres no cost to get started and you can start learning while doing. Plus there's no risk.

Ty Ash · Answer

Hi @Jon Hobgood!I'd recommend that you keep/start learning! Podcasts, Books, and Mentors you find by networking. I'd pick up a copy of Set for Life by Scott Trench as it has a good framework for financial independence, especially for a newer investor. Real Estate is just a part of your total financial picture so don't become too focused on just real estate. You'll want to learn more ways to increase your income now and in the future, keep your expenses low, and take the difference to invest into assets, real estate/business. I know you mentioned starting with a single family, however, a house hack will probably be one of the best strategies for you to get started and take action while giving you a great return because of the low % down needed to get started. Once you get to this point, make sure to run your numbers for both while living in the house hack (lowering your living expense to less than what it would be to rent in your area) and post move out where you need to be at least break even after accounting for your monthly payment + maintenance, capex, vacancy, property management. It sounds like you are still very much in the education phase. I highly recommend that you don't rush your way through this but get to a point where you've built up confidence in analyzing, acquiring, and managing your first deal. Tag on trying to find a mentor as well that you can ask questions along the way.Best of luck getting started! Here for you with any questions you have along the way!

Jon Hobgood · Answer

@jim @Jim Pellerin What makes you say Wholesaling vs. Maybe flipping?

Jim Pellerin · Answer

@Jon Hobgood I would recommend start with wholesaling.